Interview: Airbus
>> the u.s. and european union file dual complaints with the world trade organization, arguing that government subsidies given to boeing and airbus violate trade rules. they threaten to disrupt the financing each company uses to develop aircraft. ralph crosby is the chief executive of the european arm of the parent company of airbus and spoke with michael mckee about why he vehemently disagrees with the u.s. claims.
>> any time this kind of dispute happens, it’s unfortunate.
>> but you are selling a lot of aircraft these days, 305 last year compared to boeing’s 281, yet you get a subsidy meant for start-up countries in europe. is that fair?
>> your assertion is wrong. there is no subsidy meant for start-up companies. what we’re talking about say method for creating a level playing field between two different methods of government support for commercial aircraft manufacturers.
>> this was an agreement put in place in 1992, i believe, when the u.s. agreed to allow subsidies for airbus because the company was in a launch mode, was trying to get going. have the circumstances chanked? do you still need the kind of money you get from the governments of europe?
>> well, again, your facts are wrong. that’s not the reason that this agreement was reached. the agreement was about two different systems where commercial aircraft manufacturers are supported by their governments in two ways. in one case, it’s by repayable loans, the impact on air bus and eads. on other side, there are supports provided by agencies such as nasa and the department of defense for the products that u.s. manufacturers, in this case, boeing, developed.
>> so you say and i assume that the world trade organization will decide whether or not i’m right or wrong, but you say at this point that boeing gets more subsidies than you do?
>> no, no, no. i said it’s about an even playing field and in this case you have two different types. one is repayable loans, the other is supports which are not repayable but go directly to the companies. we’re not the one that’s raising the issue but i’ll tell you that we believe that if there must be adjustments, they need to be made on both sides.
>> why do you think either company would need subsidies? why couldn’t you both stand on your own?
>> it’s all about the way governments operate. these are important industries with strategic implications on both sides and rather than saying there won’t be any, which was one of the options, it’s one of the options in the past and going forward, the decision in 1992 was to have this mechanism and the mechanism, as i said, recognized that both sides were receiving benefit from the governments that regulated their activities.
>> an e.u. official said today that the likely course of action is for the w.t.o. to rule against both sides. how would that strike you?
>> look, i’ll leave that to the governments to decide. what we want and what we believe is that there ought to be a level playing field and either way is fine. but the subisition and the implication that airbus or eads or on the european side that there are inec witt―enec wits developed, that’s not true.
>> so if both are ordered to cut subsidies, that’s ok with eads?
>> it is, indeed. let me point out, in our balance sheet, all of these loans are carefully displayed and all of those loans are repaid. none have been forgiven and none have been defaulted and i’ll tell you for the latest program we have, the 8-380, the large aircraft, where the large share of the loans exist, the interest rate we’re paying is greater than 7%. it’s hard for me to understand how that’s a subsidy.
>> boeing today, in a statement, said they hope that these complaints will lead to a new negotiated agreement between the two governments. is that your hope, as well? do you think that’s a possibility?
>> i hope so. we don’t need this kind of dispute. we have enough issues transatlantickically and frankly this healthy competition in aerospace and quite frankly transatlantic cooperation in% -defense are what we need to bind the communities together.
>> that was ralph crosby of eads north america speaking with michael mckee. u.s. house and senate negotiators agreed to replace a $50 billion tax break for exporters ruled illegal by the world trade organization.% there will be a $77 billion tax cut for manufacturers and incentives for u.s. companies to expand abroad. the export tax break triggered accelerated european union sanctions on u.s. products that reached 12% this month. the bill may go to house and senate voting tomorrow. it’s not just oil, the prices of many industrial metals like copper and steel have been forging rallies, moving stocks. that story is coming up.
